Overview

The Customs Act 1901 was amended to introduce the ability to make Tariff Concession Orders (TCOs) through Part XVA, which allows the Chief Executive Officer of Customs to apply lower rates of customs duty to specified goods. This legislative measure was enacted to address the gap in the Customs Act by allowing for tariff concessions on goods not produced domestically and for which no suitable substitute is available. The Tariff Concession Instrument No. 0944791, enacted in 2010, is an example of this legislative provision in action, where McPherson's Consumer Products Pty Ltd successfully applied for a TCO on certain tubular knitted bags, resulting in a duty rate of free instead of the general rate of 7.5%. The policy objective of this legislation is to encourage imports of goods not produced in Australia and to provide relief to importers by potentially allowing refunds of duty paid prior to the TCO's effective date.

Scope and Application

The Tariff Concession Instrument No. 0944791, issued under the Customs Act 1901, applies to specific goods—in this instance, certain tubular knitted bags—and provides for a reduced rate of customs duty, from 7.5% to free, upon application and approval by the Chief Executive Officer of Customs. This instrument is designed to benefit entities and individuals involved in the importation of these goods by reducing their financial burden. The Act applies across the Commonwealth of Australia, with its jurisdiction stemming from the Customs Act 1901. The process for applying for such a tariff concession is outlined in section 269F of the Act, where an application must be made to the CEO, and the application must meet certain criteria as set out in sections 269C and 269D of the Act. Notably, the instrument does not apply to goods specified in section 269SJ of the Act, which are ineligible for tariff concessions. The instrument became effective from 25 November 2009, the date on which the application was lodged, as per subsection 269S(1) of the Act. The instrument does not disadvantage any person other than the Commonwealth and does not impose any liabilities on any person.

Key Provisions

The Customs Act 1901, under Part XVA, provides for the creation of Tariff Concession Orders (TCOs) that can reduce the rate of customs duty on certain goods. Section 269F of the Act outlines the process whereby a person can apply to the Chief Executive Officer of Customs (CEO) for a TCO. To be considered, the application must not relate to goods specified in section 269SJ, which lists goods that are ineligible for a TCO. If the CEO determines that the application meets the core criteria specified in section 269C, a TCO is to be issued. Section 269C stipulates that an application meets the core criteria if no substitutable goods were produced in Australia in the ordinary course of business on the date the application was lodged. The Act defines "goods produced in Australia" in section 269D, "ordinary course of business" in section 269E, and "substitutable goods" in section 269D in relation to goods the subject of a TCO application. Essentially, this means that if no Australian-made goods are capable of performing the same function as the imported goods in question, the application is eligible for a concession. Upon satisfaction that the application meets the core criteria, the CEO must issue a written order under section 269P(3), declaring that the goods are subject to a specified item of Schedule 4 to the Customs Tariff Act 1995. For example, TCO No. 0944791, made on 5 February 2010, declared that certain tubular knitted bags were subject to item 50 of Schedule 4, resulting in a duty rate of free instead of the general rate of 7.5%. The CEO is also required to publish a notice in the Gazette under section 269K(1) inviting submissions from interested parties; however, in this case, no submissions were received. The Act imposes obligations on the CEO to process TCO applications and to ensure they meet the core criteria before issuance. It also mandates that TCOs do not adversely affect the rights of any person other than the Commonwealth regarding actions taken before the TCO’s registration. Importers benefit from this arrangement as they can apply for a refund of duty on goods imported since the TCO was taken to have come into force on the application date. Importantly, the TCO does not impose any new liabilities on any person. Failure to comply with the requirements of the Customs Act 1901 or the associated regulations could lead to penalties. Under section 287 of the Act, any person who contravenes the Act or the regulations may be liable for a civil penalty of up to $22,200 for a corporation and $4,440 for an individual. Criminal penalties, as outlined in section 291, can include fines of up to $222,000 for a corporation and $44,400 for an individual, or imprisonment for up to five years, or both, depending on the severity of the offence. These provisions underscore the importance of adhering to the legislative framework governing TCOs.